Question

Wilmington Company has two manufacturing departments--Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year--Job Bravo. Estimated Data Manufacturing overhead costs Direct labor-hours Machine-hours Assembly $ 1,920,000 80,000 32,000 Fabrication $2,240,000 48,000 160,000 Total $ 4,160,000 128,000 192,000 Assembly Fabrication Job Bravo Direct labor-hours Machine-hours Total 26 21 9 Required: 1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo? 2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Bravo? (Round your intermediate calculation to 2 decimal places.) 1. Plantwide manufacturing overhead applied to Job Bravo 2. Manufacturing overhead applied from Assembly to Job Bravo Manufacturing overhead applied from Fabrication to Job Bravo Total departmental manufacturing overhead applied to Job Bravo

Answer 1

1.

Estimated manufacturing overhead cost = $4,160,000

Estimated direct labor hour = 128,000

Plantwide predetermined overhead rate = Estimated manufacturing overhead cost/Estimated direct labor hour

= $32.5 per direct labor hour

Actual direct labor hour used by job Bravo = 26

Overhead applied to Job Bravo = Actual direct labor hour used by job Bravo x Plantwide predetermined overhead rate

= 26 x 32.5

= $845

2.

Estimated manufacturing overhead cost of assembly department = $1,920,000

Estimated direct labor hour of assembly department = 80,000

Predetermined overhead rate in assembly department = Estimated manufacturing overhead cost of assembly department/Estimated direct labor hour of assembly department

= 1,920,000/80,000

= $24 per direct labor hour

Manufacturing overhead applied from assembly to Job Bravo = Actual direct labor hours used in assembly x Predetermined overhead rate

= 17 x 24

= $408

Estimated manufacturing overhead cost of fabrication department = $2,240,000

Estimated machine hour of fabrication department = 160,000

Predetermined overhead rate in fabrication department = Estimated manufacturing overhead cost of fabrication department/Estimated machine hour of fabrication department

= 2,240,000/160,000

= $14 per machine hour

Manufacturing overhead applied from fabrication to Job Bravo = Actual machine hour used in fabrication x Predetermined overhead rate

= 12 x 14

= $168

1	Plantwide manufacturing Overhead applied to Job Bravo	$845
2	Manufacturing overhead applied from assembly to Job Bravo	408
	Manufacturing overhead applied from fabrication to Job Bravo	168
	Total departmental manufacturing overhead applied to Job Bravo	$576

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